Which Group of Americans Will Get the Most Stimulus Money?
by Christy Bieber | Published on Sept. 5, 2021
The expanded Child Tax Credit played a pivotal role in helping these Americans.
In 2021, families across the United States will receive an average of $3,450 in stimulus money. This money comes from stimulus checks, valued at $1,400 each, as well as from an expanded Child Tax Credit and an expansion of the Earned Income Tax Credit.
But not everyone will receive the same amount of stimulus funds. In fact, lower income households -- and especially lower income parents -- will see much more stimulus money than other people. Here's why.
New eligibility rules helped lower earning Americans
According to an analysis from the Institute on Taxation and Economic Policy, the country's lowest-earning households are on track for the largest influx of funds this year for any family. Specifically, households with $21,300 in income or less will receive an average of $3,590 in 2021 -- which is just a bit higher than the overall national average.
The average payment lower income households will receive is much higher than some of their higher-earning counterparts, though. For example, households with an income of $111,300 to $247,400 will get average payments totaling just $2,830 while those with incomes between $247,300 and $601,700 will get an average of $280.
The big reason why lower earners are on track to get more government funds deposited into their bank accounts is the income limits set for eligibility for all of the coronavirus stimulus relief, including for the stimulus checks, the expanded Child Tax Credit payments, and the expanded Earned Income Tax Credit (EITC).
As people's incomes go up, they begin to lose at least some of these relief funds. For example, Americans with incomes up to $21,300 will receive an average of $320 in 2021 due to the expanded EITC. Those with incomes that are even just slightly higher ($21,300 to $39.800) will get an average of only $60 from the EITC.
Low-income parents will also see the biggest influx of extra cash from the Child Tax Credit. This tax credit used to be worth $2,000 per child, but only $1,400 of it was refundable. Since households earning less than $21,300 rarely have hefty tax bills valued at $2,000 or more, most of the time they wouldn't receive their full Child Tax Credit.
Under the new rules in effect in 2021, however, the amount of the credit is raised to $3,600 for children under six and $3,000 for older children to age 17. The credit is also fully refundable, which means that even people with low or no tax bills will get the full amount of money.
According to the Congressional Research Service (CRS), average families could receive $5,086 in 2021 and 2022 thanks to the expanded child credit alone. This is a huge jump up since the CRS showed households with incomes under 100% of the poverty level would have received an average of just $976 without the expansion. Of course, this is higher than the overall average amount of stimulus money going to all lower-earners, but that's because there are many households in that group who don't have children.
Ultimately, the stimulus money is doing what it is supposed to -- helping low earners and especially low-income parents who may have faced serious struggles coping with the financial effects of the pandemic and resulting lockdowns.
Alert: highest cash back card we've seen now has 0% intro APR until 2024
If you're using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
About the Author
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.